Herald Feb 2015

HERALD

by Henry Butcher Malaysia

FEB 2015

“Harmonic” // three rings symbolizing ‘live’, ‘laugh’ and ‘love’ of a family, in Hevea Kemensah.

WHAT’S IN STORE FOR THE PROPERTY MARKET IN THE YEAR OF THE WOOD SHEEP BANGKOK’S THAN LIVING LAUNCHED

FROM HEVEA TO HAVEN

BONDING WITH NATURE

MALAYSIA SHOPPING CENTRE INDUSTRY 2015

A month has already passed since we welcomed the start of 2015. In the shopping malls, hardly have the Christmas and new year decorations been taken down, auspicious red coloured decorations have sprung up to welcome the advent of spring. Lilting Christmas tunes have been replaced by joyous Chinese new year songs as shoppers are eased into the Chinese New Year mood. For this year, Chinese New Year festivities will begin on February 18 and 19.

An informed and astute investor always see the opportunities in every market situation and more importantly, capitalizes on them.

February 4 is of particular significance to the Chinese community, especially believers of feng shui as the day will mark the transition of the Chinese zodiac calendar from the wood horse to the wood sheep. The year of the wood horse has generally been not too bad for Malaysia with decent economic growth and by and large peaceful conditions. Still, the year was sullied by three heart wrenching air disasters and ended with a weakened Ringgit, reduced oil revenues and severe floods which devastated the east coast states. Nevertheless with change, hope springs eternal and with the changeover to the wood sheep, it is hoped that the bad vibes of the past year will be swept away and be replaced by more positive notes.

Starting off the year with lower oil revenues than that projected in Budget 2015, GDP growth is expected to be revised downwards and this is something that the property fraternity will be watching cautiously. With the Goods and Services Tax making its appearance in April and adding an air of uncertainty, how the economic environment will ultimately pan out will determine what goes in the property industry. As it is, the various cooling measures introduced by the government have already taken bite and this is reflected in declining residential transaction volumes and slower price increases. However it turns out, one thing is clear; the substantial price increases that we have witnessed over the past few years has been relegated to the history books. It is very unlikely that we will see the same pace of price increases in the immediate one to two years ahead. This is nonetheless a good thing as it will ensure that the property market growth rates will be more orderly and sustainable.

At Henry Butcher, last year was an eventful one. A fire broke out on Deepavali and damaged our Project Marketing and Agency department office.

We were lucky that it was a public holiday and no one was hurt although most of the furniture was destroyed and files were lost. Nevertheless, it has been a long time since the office was last renovated and perhaps it was God’s way of telling us to renew and recharge to prepare for the challenging times ahead. Our office has since undergone extensive repairs and renovations and has become brighter, more cheerful and certainly more pleasant to work in. Our Corporate Communications department has also moved in with the Marketing and Agency department. Refreshed, we stand ready to charge into the new year to serve our clients better and with renewed vigour and a higher level of creativity.

In concluding my message, on behalf of the Henry Butcher Malaysia group, I would like to wish all staff, associates and clients a Prosperous and Happy Chinese New Year. Gong Xi Fa Cai.

Tang Chee Meng Chief Operating Officer

2 / HERALD FEB 2015

BANGKOK’S THAN LIVING LAUNCHED

Given the opportunity to mission in on a project launch can be one of the most exciting and yet challenging company activities. The energy level is high, the expectations of a successful launch abound. As Than Living, Sathorn Charoenrat, Bangkok project launch ended on 30 November, 2014, the launch was very well attended and brisk sales were made as buyers cut across the whole spectrum of age group from young singles to couples to retirees.

It was a long and busy two days for Henry Butcher’s sales and marketing team as they engaged with the guests whilst sharing more information and insights about Bangkok as a new property investment destination.

Look out for more exciting projects in 2015!

The launch, which was held for two days in One World Hotel, saw an approaching crowd as early as 10am in the morning. There were several reasons on why they chose Bangkok as their preferred location. Some were in as an investment whilst others were looking for a second home as they find Bangkok to be a relaxing haven for a getaway holiday. Aside from that, how can one not enjoy the bliss moments of such excellent gourmet Thai food in Bangkok?

Lim Eng Chong, director of Henry Butcher Malaysia gave a warm welcome to guests with an opening speech on the current property market sector and the advantages of investing in the Thai capital. Guests were delightfully happy as they were served with authentic refreshments from Bangkok.

In mid-afternoon, there were more registrants who came by and were looking forward to attend the talk from Piya, who is known as the brainchild developer behind Than Living. Most of the attendees were new to Bangkok but what got them attracted was the reasonable pricing which costs from only RM295,000 and a 6% guaranteed rental return over two years.

Signature of Rewarding Life in Bangkok FULFILL EVERY CHAPTER OF YOUR LIFE WITH THE CONDOMINIUM INSPIRED FROM YOUR CHOSEN LIFESTYLE HENRY BUTCHER REAL ESTATE SDN BHD

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Anticipate a line up of exciting Bangkok projects for sale at Henry Butcher Malaysia. For more information, log on to www.henrybutcher.com.my, call +60179807103 or visit the Henry Butcher HQ.

3 / HERALD FEB 2015

FROM HEVEA TO HAVEN

It is not an overstatement to say that the district which was once a poorer cousin to the west, does offer extraordinary potential for significant growth. In fact, it has now became a shining star of its own as a new affluent neighbourhood with plenty of high end development amidst the Quartz hills of Melawati.

The established town centre of Melawati is being equipped with various amenities include an upcoming shopping mall (Sime Darby in a joint venture with CapitaMalls), universities, international schools, recreation club and Giant supermarket. You literally have all you need in one place. Most of the families’ lives had become happily entwined with the district.

It’s a party over here and one you definitely do not want to miss out!

The recently completed trophy landed property, Hevea in Kemensah Heights surprisingly does not come with a hefty price tag, at least for now. From construction of the contemporary units to the exquisitely landscaped park with water feature and the commision of the one of a kind sculptures (“Return”, “Harmonic” and “Together”), everything was tastefully done. We’d have give it up to the folks at Idolite Corp. They took every little detail into account and with execute the project with great passion despite the project was practically sold out at the early stage.

Life is short, all you need is an exceptionally unique crib in a quaint neighbourhood with spectacular hill view and gracious garden square to emulate the Italian way of life - la dolce vita. And this, is where you will want to be.

“The value has gone up so much.”

Mdm Bryant ‘s daughter who lives in London bought a Cluster House unit for investment.

“I was quite impressed with the workmanship.”

Mr. Asri bought a Semi-D unit for own stay. He thinks it’s ideal for his family.

4 / HERALD FEB 2015

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• Developer License's: 11297-1/03-2016/366 • Validity Period: 25-03-2011 to 24-03-2016 • No. Advertising & Sales Permit: 11297-1/2556/2012 (11) • Validity Period: 01/12/2011 to 30/11/2012 • Land tenure: 99 years lease (expiry 2109) • Approving Authority: Majlis Perbandaran Ampang Jaya • Building Plan Ref. No. : MPAJ 04/112-03/10 • Land Encumbrances: HSBC Bank Malaysia Berhad • Restriction-in-interest: Not Applicable • Number of Units: 20 (Semi D), 18 (Cluster), 12 (Townhouses) • Size: 3734 kp (Semi D), 3632kp - 4004kp (Cluster), 1490kp - 1843kp (Townhouse) • Price: RM2, 000,000 - RM2, 400,000 (Semi D), RM1, 800,000 - RM2, 000,000 (Cluster), RM603, 450 - RM818, 450 (Townhouse) • 7% Discount for Bumiputra

Ukay Heights

BONDING WITH NATURE Beneton Properties recently unveiled its sales gallery and show unit for its latest project, Irama Wangsa, a resort themed condominium located in Wangsa Maju, just fifteen minutes from Kuala Lumpur city centre. Situated on level 12 of Menara Chan along Jalan Ampang, the sales gallery is just six floors down from Beneton’s corporate office.

The Irama Wangsa sales gallery showcases the beauty and plus points of the project and the displays include posters and a huge architectural model of the project.

One instantly gets to feel the resort-like environment of the project as soon as he or she comes out from the lift.

Plants adorn the walls of the lift lobby providing a taste of the green environment which residents will enjoy in Irama Wanga.

The architectural model shows in detail the huge expanse of greenery within the project, from the existing hill which will be left intact and in fact, upgraded with a jungle walk and a hilltop pavilion. A free form resort swimming pool, a 25m lap pool with infinity edge overflow and a 50m all in one pool and jungle island with sunken seats take centre stage in the model. The condominium units are strategically positioned to provide residents with excellent views of the going-ons at the pool deck.

The show unit selected to show case the architectural highlight of the project is that of Type G, with a large built-up area of 1,637 sq ft. Type G features three spa-

cious bedrooms, a study and a generous balcony to allow residents to enjoy the great outdoors within the comfort of one’s home. For the show unit, the wall dividing the study and the master bedroom was intentionally removed to create a bigger room with space for a combined walk in wardrobe and study. This is to show future residents the possibility of how their homes can be customised to suit their preferences and needs.

The interior design is of a modern contemporary theme with clean lines and understated elegance. Instead of the usual plain white walls, all units in Irama Wangsa will be painted a light shade of grey and highlighted with white door frames. One cannot help but fall in love with the pleasant and soothing combination of the pastel shades of the furnishing punctuated by splashes of colours from strategically positioned artefacts and paintings. The right selection of porcelain floor tiles and laminated timber finishes is very important in determining the overall feel of the unit and here at the Irama Wangsa show unit is really a home that you will look forward to coming home to after a stressful day at work.

The show unit offers potential buyers a very good portrayal of what they can expect in every home in Irama Wangsa irregardless of the layout type. The quality of the finishes and the thoughtful little touches has separate the outstanding from the ordinary which is clearly highlighted in the show unit.

The Irama Wangsa sales gallery and show unit is open daily from 10.00 am to 6.00 pm.

For enquiries please call 03-2715 1166 or 012-795 8995 / 016-308 5825

6 / HERALD FEB 2015

WHAT’S IN STORE FOR THE PROPERTY MARKET IN THE YEAR OF THE WOOD SHEEP

By Tang Chee Meng, Henry Butcher Project Marketing 2014, the year of the wood horse, ended for Malaysia on a sad note with Air Asia QZ 8501, yet another plane associated with the country meeting a disastrous end after taking off from neighbouring Surabaya enroute to Singapore. The Ringgit has plummeted to a five year low against the greenback whilst crude oil prices dropped nearly 60% since June to below US$ 50 per barrel. Severe floods hit the east coast states and caused loss of lives, serious property damage and major disruptions to people’s lives, businesses, schooling and the local economies. The property market continued to decelerate, a trend started in 2012, weighed down by the various cooling measures introduced by the government. Residential transactional volume declined. House prices however kept going up although now at a much more moderate pace.

February 4th marks the change of the Chinese zodiac to the wood sheep. (the change of the animal sign does not take place from the 1st day of the Chinese Lunar New Year which is 19th February, contrary to what some people think). Will Malaysia experience better fortunes in 2015? What would the fortune cookie reveal?

Firstly, the weakening of the Ringgit means Malaysian exports will become more competitive and this will be a boon to the export sector. Imports, including building materials, will however become more expensive. With more developers adopting green building standards which advocate the use of local building materials, the impact of the increased cost of imported building materials will be mitigated to a certain extent.

For businesses which have borrowed heavily in foreign currencies or which have outstanding payments denominated in foreign currencies, the decline of the Ringgit is of course a scary development as it has increased their financial burden. The decline of the Ringgit is nevertheless positive in other aspects in that Malaysian real estate will become more attractive and appealing to investors from overseas. Malaysians will also find it more expensive to buy foreign properties and the funds which may otherwise have been spent buying a property in London or Melbourne may, hopefully find its way to a property within the country.

Secondly, the country has to deal with the significant drop in crude oil prices which has fallen by close to 60%

The O&G sector contributes around 30% of the country’s income and the decline in oil revenues will definitely hit the country hard. It is estimated by MARC Rating agency that for every US$1 drop in the price of Tapis, Malaysia’s oil revenue will decline by RM400 million to RM500 million. The agency also forecast that GDP for 2015 would likely be only around 4.7%, below the 5% to 6% projected by the government during the tabling of Budget 2015 when crude oil prices were still hovering around US$ 100 per barrel.

With lower economic growth and consumer confidence, consumption patterns could be altered, especially if the O&G sector implements any staff layoffs. The office sector which has been principally driven by the O&G sector for the past few years will see a slowdown in office expansion and this could have an impact on overall occupancy rates, compounded by an expected increase in office supply, with the impending completion of a number of new office buildings in Kuala Lumpur. The rental market for luxury apartments / condominiums may also be impacted depending on the number of expatriates in the O&G industry being sent home.

The implementation of GST and removal of some deep rooted subsidies will radically alter Malaysia’s tax regime and change the way businesses operate. Cost of living is expected to rise as a direct result of the GST. Commercial and industrial properties which are subject to GST will result in an increase in overall acquisition costs. Residential properties which are tax exempt should in theory, not see any increase in costs as buyers do not need to pay GST on residential transactions. However, developers still need to pay GST on construction costs, building material supplies as well as professionals services but cannot claim any tax input credits. This results in an overall increase in costs to developers of around 3 to 4% and will eat into the developer’s profit margins unless they can be passed on to the house buyers. A smooth transition will make lives easier for everyone but a chaotic introduction of the new tax system will result in loss of productive man hours. Overall, the introduction of GST is a positive step for Malaysia and is long overdue. GST is a more efficient system of tax collection and Government revenue is projected to increase and will to a certain extent mitigate the impact of lower oil revenues. Once everyone gets used to GST, life will return to normalcy and the country can 8 / HERALD FEB 2015

then focus on growing to the next phase of development to become a developed nation in 2020.

The PM has just announced a restructuring of Budget 2015 to accommodate the weakened Ringgit and lower oil prices. The growth rate for the year has now been reduced from between 5% to 6% to between 4.5% to 5%. If this is achieved, a growth rate of above 4% is still a decent number by any standards and the downward revision of the economic growth rate is not expected to have a significant impact on the residential property sector. Nevertheless, the volume of residential property transactions is expected to go down due to a decrease in speculative activities and more cautious sentiments amidst stricter lending guidelines adopted by the banks. The drop in oil prices have led to a lowering of the costs of some building materials but with the implementation of the goods and services tax in April, overall construction costs are expected to rise. Prices of houses are not expected to decline as buying interest is still strong although the frenzied pace of the past few years have all but dissipated. House prices will still continue to go up but this time, at a more moderate, sustainable pace. Investors will take a more careful, considered approach and will support projects which are in good locations, appropriately priced, well designed and backed by developers with strong financial credentials and a good track record. Smaller, more affordably priced units and landed properties will dominate market activity this year. Large sized units, unless extremely well designed and attractively packaged and priced, will find take-up rates to be slower. Generally, developers are expected to slow down on their sales launches and adopt a more cautious strategy.

Although there may be clouds of doom and gloom in the horizon, the year of the wood sheep is not expected to be a bad year for the property market. Generally, Malaysian developers have learnt from their mistakes during the crisis periods of 1997/98 and 2007/08 and are now more nimble on their feet, not being bogged down by huge land banks which are financed by expensive bank loans.

They are more resilient, creative and sensitive to their customer’s preferences and responsive to market changes.

The industry should be able to ride through the challenging times and emerge even stronger at the end of it. The decline in the volume of transactions may be a concern to some, especially developers who find their sales take-up having slowed down. Nevertheless, if one were to take a broader perspective, the statistics could indicate a decline of the speculative activities that have been fuelling the market and driving up prices over the past few years. The positive thing to note is that although house prices are still going up the rate of increase has slowed down to a more moderate and sustainable pace and this is good for the long term viability of the market. It is important now for the authorities to ensure that whilst the market is disciplined and reined in to prevent an asset bubble from building up, it should not take hasty steps to control it which could hurt not only the developers but also the genuine investors and home buyers. As a doctor once told an ex-colleague of mine, you don’t need to use an atomic bomb to kill a mosquito. Let us hope that common sense is not chucked aside whilst pursuing idealistic policies of a home owning democracy.

9 / HERALD FEB 2015

MALAYSIA SHOPPING CENTRE INDUSTRY IN

By Tan Hai Hsin, Henry Butcher Retail A new challenge in 2015 for the shopping centre industry is the introduction of a new tax system in Malaysia.

Consumers’ spending will likely to be affected from second quarter of 2015 due to implementation of the Goods & Services Tax (GST) from 1 April 2015. Nevertheless, the negative impact will not be drastic and it will last for a short period of time.

For the first quarter of 2015, consumers are expected to spend more due to Chinese New Year, employees receiving bonuses, the distribution of BR1M 4.0 and GST. Chinese New Year for one will take place from the middle of February 2015. Thus, a higher retail spend is expected from the first week of February. In addition, employers are likely to distribute bonuses to employees starting from end of this month. And for 2015, Bantuan Rakyat 1Malaysia (BR1M) has increased the monetary distribution and it will benefit more lower and middle-income Malaysians. These cash handouts will benefit six million households and two million unmarried individuals in the country. BR1M 4.0 will be distributed in three installments in 2015 – January, May and September.

The rise in retail spending will be even more obvious for high-value consumer goods and big-ticket items. For those who plan to buy luxury fashion items, jewelleries, car, computer, camera, handphone, home appliances, home electrical and electronics as well as furniture and furnishing in 2015, they will start buying in the first quarter of 2015 in anticipation of higher prices of these products after 1st of April.

For the six-month period after April 2015, retail sales will likely slow down as consumers would have made all the major purchases in advance and choosing the waitand-see attitude on the prices of goods and services. Retailers will need to adjust their retail prices according to their costs as well as the market condition from 1 April 2015. But, Malaysian consumers will get used to GST by the last quarter of 2015. Retail spending will return to normal again by this period.

For 2015 also, Malaysia will celebrate another major event with Malaysia Year of Festivals 2015 (MyFest 2015). MyFest 2015 has a yearlong calendar packed with festivities of every genre, including cultural festivals, shopping extravaganzas, international acclaimed events, eco-tourist events, arts, music showcases and food promotions. Kuala Lumpur will have the most number of

Image courtesy of Pavilion KL

organised events in conjunction with this festival.

MyFest 2015 aims to attract 29.4 million foreign visitors with RM89 billion tourist receipts. This will benefit retail centres operating in city centres and major tourist attractions throughout the country.

“‘“The good news is the liberalisation of Malaysian retail sector in recent years will continue to encourage more foreign retailers to invest and set-up their retail stores within shopping malls in Malaysia. ““ However, in 2015, shopping centre managers need to work harder to get their shoppers to spend with their pro-active promotional activities. New shopping centre owners will face challenges in attracting new retailers during this period due to the uncertain market conditions. Further, no significant movement is expected in terms of average rental rate and average occupancy rate for Malaysian shopping centres in 2015.

10 / HERALD FEB 2015

A GREAT END TO A GREAT YEAR “May your days be merry and bright! “ We believe Christmas wouldn’t sound as sweet without the sound of Christmas Carols. We at Henry Butcher’s HQ gathered and celebrated this jovial season together. On the 12th of December, together with the directors, senior managers and the rest of the team members, we sang along to Feliz Navidad and Jingle Bells to kick start the year end party as we welcome the beginning of 2015.

And of course, we made sure our staff members are treated to a scrumptious meal of barbecued minty lamb, roasted chicken with sautéed sauce, buttery cauliflower and carrots, warm almond rice, fresh salad, baked fish fillets with roasted tomatoes and not forgetting appetising desserts for a mouth-watering tummy filling.

There is no other ways to end a party with the gift-giving tradition, an essence of true sentimentalism. We wrapped up the evening with an abundance of happiness, joy and love. We look forward to celebrate many more happy moments!

11 / HERALD FEB 2015

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HERALD FEB 2015

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